A layoff is one of the most jarring life events someone can experience. It disrupts routines, confidence, and the sense of stability people build over years or even decades. I have worked with clients who spent most of their careers at one company, and the emotional impact of a job ending suddenly can be just as heavy as the financial impact.
Allow Time to Process
The first step following a layoff is acknowledging what has happened. You cannot make sound financial decisions if you are still trying to deny the reality of the situation. Give yourself the space to process it, because avoiding it will only postpone the choices that eventually need to be made.
Create a Temporary Budget
Once someone is ready to look forward, the next step is understanding the financial landscape they now live in. That begins with knowing exactly what money is going out each month. Most people have never taken a close look at what is essential and what is simply habitual spending. A layoff forces that clarity. Dining out, travel, online shopping, and other discretionary expenses are not bad on their own, but they become important to reassess when income changes suddenly. Creating a temporary budget that reflects the current situation provides a foundation for every decision that follows.
Review Any Exit Package Benefits
A severance package is often the next major area to review. Many people look first at the payout, but the structure of the package matters just as much. Healthcare becomes a significant factor because losing employer sponsored coverage can introduce new expenses and new decisions. COBRA can bridge the gap, but it comes with a cost and requires someone to take charge of managing payments. Severance may also include accrued vacation time, restricted stock units, or stock options. Some awards vest immediately, while others remain accessible for only a limited window. Each component influences both cash flow and long term planning, and none should be overlooked.
During this time, the emergency fund becomes a lifeline. Ideally, it covers several months of essential expenses and prevents someone from needing to sell investments quickly or tap retirement accounts prematurely. Bank savings and other accessible non retirement assets are the first tools to lean on. They exist for moments like this. If those reserves start to run low and you haven’t found a new job, attention shifts to other non-retirement assets that do not trigger penalties. Understanding these layers ahead of time protects long term goals and makes the transition more manageable emotionally.
Consider Retirement Savings Strategically
Retirement accounts such as 401(k)s and pensions should be approached calmly. These are long term assets, and most employers do not require immediate decisions. In many cases, the accounts can remain where they are while someone regains their footing. That breathing room matters. There is rarely a benefit to rushing into rollovers or distributions during an already stressful time. For people with stock based compensation tied to their employer, a layoff can sometimes open a new door for diversification. Shares or options that were not accessible while employed may now be available, which can reduce concentration risk. Revisiting the financial plan and looking at how these assets fit into the broader picture is far more valuable than acting quickly.
One of the biggest questions people ask after a layoff is whether they should change their investment strategy. I do not believe a temporary disruption in employment should automatically lead to major shifts. If you expect to return to the workforce in the near future, your long term goals remain unchanged. The money you have invested still serves the same purpose, and reacting out of fear can do more harm than good. It becomes a different conversation when a layoff shifts someone’s life plans. Some people decide they are ready to retire earlier than expected, and others want to take their life in a new direction. When the purpose of the assets changes, the strategy should change with it. Those decisions are best made with clarity rather than panic.
View a Financial Review as an Opportunity for Clarity
I have worked with clients who struggled to find work quickly and felt enormous pressure as the weeks went by. Fear tends to grow in those moments, and it becomes easy to imagine the worst possible outcome. Clients often feel relieved when they can see what their financial plan can withstand and how their assets can support them through this period. Most people have more resources than they realize. Once the numbers are laid out clearly, fear often gives way to a sense of stability, and people can see that even if they need to rely on their assets for a period of time, their long term goals remain within reach.
A good advisor helps separate fact from emotion. During a layoff, decisions driven by fear can undermine long term success. Clients need clarity about what steps they can take, what expenses must be covered, and how their goals still fit into the overall plan. Seeing worst case scenarios mapped out can be surprisingly reassuring. People realize they are not as far off track as their emotions may have led them to believe. They reconnect with their long term strategy instead of making decisions based on the crisis in front of them.
Lean on Your Advocates
A layoff is difficult, but it can also serve as a meaningful pause. It can be a moment to rest, reflect, and reset before the next chapter. With the right guidance and a clear understanding of your financial path, this transition can become manageable rather than overwhelming. If you are facing a layoff or want help preparing for the unexpected, reach out to us at [INSERT CONTACT OR CTA LINK HERE] to learn how we can support you.
